Revealing the Preferences of Social Financiers

Authors

  • Christoph Starke
  • Steffen Burchhardt

DOI:

https://doi.org/10.24352/UB.OVGU-2018-518

Keywords:

inequality aversion, social entrepreneurship, financier, public good, social service

Abstract

Financiers of social entrepreneurs are typically characterized as having some form of prosocial or CSR related objective. While in some studies such objectives have been formulated on an analytically inconvenient level, other contributions are limited only to charity finance. In this paper we identify Fehr and Schmidt’s inequality aversion as an analytically tractable and most basic motivation of social financiers in general. Specifically, we show that the financiers’ decision structures and their observable behavior coincide with the experimental findings of Fehr and Schmidt (1999). Moreover, we derive behavioral implications for social entrepreneurs. Paradoxically, given that financiers do not prefer a self-consumption of the social service, they contribute more if the entrepreneur provides them nevertheless.

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Published

2018-09-06

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